U.S. Alternative Fuels Policies Lessons Learned and Future - - PowerPoint PPT Presentation

U.S. Alternative Fuels Policies Lessons Learned and Future Directions

Roland J. Hwang

Vehicles Policy Director Natural Resources Defense Council Senate Briefing on Alternative Fuels Sponsored by the American Chemical Society February 6, 2009 Washington, DC

2 Slide

Policy Crossroads for Fuels

• Can we develop an

effective, durable policy framework to ensure the transportation fuel supply system can effect a smooth, orderly transition from conventional oil to alternative fuels that will allow the US to meet its energy security and climate change goals?

3 Slide

Overall Summary of US Alternative Fuel Policy Experience…

• The bad news is

that…

– 20 years of US alternative fuel policy, have resulted in less than 3% displacement of

• il used in the motor

vehicle sector.

Alternative Fuel Consumption, 2006 (Source: EIA)

Fuel Type million gasoline- equivalent gallons percentage Gasoline + Diesel 184,393 Ethanol in gasoline 3,729 2.0% Biodiesel 261 0.1% Compressed Natural Gas 172 0.1% Liquefied Natural Gas 173 0.1% Other 503 0.3%

Total Alternative Fuels 4,837 2.6%

4 Slide

Overall Summary of US Alternative Fuel Policy Experience…

• The good news is that…

– Policies have pushed the oil and auto industries to make cleaner gasoline and diesel fuels, and cleaner cars and trucks. – Stimulated investments and innovation in clean fuel technologies.

• Is this time around different? Key factors that

contributed to past “failures” are changing:

– Record high fuel prices – Peaking of “conventional” oil especially in non-OPEC countries – Growing likelihood of mandatory controls on emissions contributing to global warming

5 Slide

Key Alternative Fuel Policies

• Alternative Motor Fuels Act of 1988 (AMFA)

– CAFE credits for manufacturing AFVs (fuel flexible vehicles)

• Clean Air Act of 1990 (CAA)

– Mandated oxygenate usage in gasoline (MTBE, ethanol)

• Energy Policy Act of 1992 (EPAct)

– Alternative fuel-capable vehicle purchase requirements for fleets

• California Zero-Emission Vehicle Mandate (1990)

– Production mandate for super clean vehicles

• Renewable Fuel Standard (EPAct 2005 and EISA
• f 2007)

– Replaced oxygenate mandate with ethanol volumetric requirement

6 Slide

Flex Fuel Vehicle Credits (AMFA)

• AMFA FFV credits help increase the number of alternative

fuel vehicles on the road, but failed to ensure they run on

• E85. (RFS may help remedy)

Of over 6 million FFVs

• n road, only roughly

300K (5%) actually use ethanol in the form of E85 (85% ethanol, 15% gasoline)

7 Slide

Low Blend Strategy (Ethanol)

• CAA oxygenate blending

requirement (and later the RFS) has been the most “successful” (in terms of oil displacement) strategy.

• While ethanol currently

accounts for about 75% of alternative fuel use, it is still less than 3% of total motor vehicle fuel supply.

500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 Ethanol in gasoline Biodiesel Compressed Natural Gas Liquefied Natural Gas Other million gasoline-eq gallons

8 Slide

Fleet Purchase (EPAct 1992)

McNutt and Rodgers, “Lessons Learned from 15 Years of Alternative Fuel Experience, 1998-2003”, US DOE, 2003.

9 Slide

Existing Fuels Got Much Better

• Gasoline and diesel were able to compete far

better than anticipated on reducing criteria air pollutants

– California’s efforts to transition to methanol (M85) in late 80’s resulted in ARCO’s developing reformulated gasoline – California’s ZEV program resulted in super clean gasoline cars (PZEVs and conventional hybrids) – Fleet mandates for CNG buses and trucks have been slowed by “clean diesel” trucks and hybrid buses

10 Slide

Climate Policy can do Double Duty

• But promoting domestic petroleum and high carbon fuels will

make meeting climate objections much harder.

11 Slide

Key Existing Policies

• Federal Renewable Fuel Standard (“RFS 2” of EISA07)

– Mandates 36 billion gallons of renewable fuels by 2022 – However, greenhouse gas benefits are modest due to grandfathering and does not promote other low carbon fuels, like electricty for plug- in hybrids

• California Low Carbon Fuel Standard

– Performance-based, fuel neutral GHG standards on gasoline and diesel fuels. Will be adopted by CARB in April 2009.

• California Zero Emission Vehicle Program

– Requires about 58,000 Plug in Vehicles in the 2012-14 timeframe in CA, 3 times since 13 other states currently have California’s program

12 Slide

Key Design Elements, Transportation Climate Architecture

. .

Direct Measures & Standards

Vehicle emission and/or efficiency standards Low-Carbon Fuel Standard Smart Growth policies

Transportation Fuels Included in the Cap

Fuel provider required to submit allowances for fossil-fuel end use

Performance-based Incentives

Retooling funds for auto factories, cellulosic ethanol, smart growth projects

13 Slide

Emerging Consensus for Fuels Policy Framework? USCAP Blueprint

3 Auto: GM, Ford, Chrysler 3 Oil: BP, ConocoPhillips, Shell 5 NGOs: NRDC, EDF, Pew, TNC, WRI 2 Chemical Companies: DuPont and Dow 18 0ther members http://www.us-cap.org/

• Inclusion of fossil-based transportation

fuels in an economy-wide cap-and-trade system in combination with environmentally effective and cost- effective complementary measures for all

• f the major components of the

transportation system.

• EPA development of a GHG

Performance Standard for Transportation Fuels to replace RFS

• Federal support for pre-commercial, early

commercial and higher-risk phases of technology research and development for technologies that represent “breakthrough innovations” including advanced low-carbon fuels and the vehicle

14 Slide

Recommendations

• Need comprehensive approach combining binding targets,

standards on vehicles and fuels, and incentives.

• Standards should, to the greatest extent possible, be fuel-

neutral, performance-based (i.e., Low Carbon Fuel Standard)

• Incentives should be provided in a performance-based

manner to a portfolio of the most promising fuels and technologies.

• Targeted policies (such as production mandates), for truly

advanced, ultra clean technologies, may be necessary in

• rder to ensure certainty for investors in risky, but extremely

promising technologies.